As deposit insurance is rolled out across China’s financial industry, regulators face a difficult balancing act. They’ll try to introduce more risk to strengthen the financial system without sparking bank runs as depositors realize the government won’t always bail them out. Read More »

The mystery around why the U.S. produces consistent job gains but uneven economic growth could be explained by a simple fact: The sectors leading recent hiring don’t add much to output.

Turnarounds in two sectors—manufacturing and finance—were major drivers of the economy’s second-quarter surge after a first-quarter contraction, according new industry-level data the Commerce Department released Thursday. But both those fields are adding jobs at a slower pace than the overall economy. Read More »

The economy had an unusual bright spot in the dreary first quarter: the federal government.

After two years of dragging on growth, a measure of the federal government’s economic output increased at a 3.2% seasonally adjusted annual rate in the first quarter, the Commerce Department said Friday. Read More »

Leaders of the five BRICS nations – Brazil, Russia, India, China and South Africa – have finally put some flesh on the bones of a long-awaited plan to set up a new development bank to rival the World Bank. Here are five observations to put it in perspective. Read More »

The Commerce Department on Friday presented a new quarterly breakdown of gross domestic product by 22 industries, a report that is meant to complement the department’s widely followed gauge of economic output by types of expenditure like personal consumption and business investment.

Top Communist Party leaders are meeting in Beijing beginning on Saturday to hammer out the nation’s broad economic agenda for the next five to 10 years – a meeting known as the Third Plenum. Those directly involved have been mum about specifics. State media are promising broad reform, though many economists and China watchers are more skeptical.

China Real Time has put together a guide to the issues the leaders could address in the plenum’s final statement and beyond. Read More »

–Finance Employment:Robert J. Shiller looks at whether there is a problem with finance jobs. “We surely need some people in trading and speculation. But how do we know whether we have too many? To some people, the question is a moral one. Trading against others is regarded as an inherently selfish pursuit, even if it might have indirect societal benefits. But, as economists like to point out, traders and speculators provide a useful service. They sort through information about businesses and (at least some of the time) try to judge their real worth. They are thus helping to allocate society’s resources to the best uses – that is, to the most promising businesses. But these people’s activities also impose costs on the rest of us. Indeed, a 2011 paper by Patrick Bolton, Tano Santos, and José Scheinkman argues that a significant amount of speculation and deal-making is pure rent-seeking. In other words, it is wasteful activity that achieves nothing more than enabling the collection of rents on items that might otherwise be free.”

–Measuring Poverty:Tim Taylor examines research on different ways of measuring poverty. “Thus, they write: ‘The results in this paper contradict the claim that poverty has shown little improvement over time and that antipoverty efforts have been ineffective. We show that moving from traditional income-based measures of poverty to a consumption-based measure, which is arguably superior on both theoretical and practical grounds—and, crucially, accounting for bias in the cost-of-living adjustment—leads to the conclusion that the poverty rate declined by 26.4 percentage points between 1960 and 2010, with 8.5 percentage points of that decline occurring since 1980.’”

–September Jobs Report:Bill McBride asks whether the jobs report for September will be released if the government shut downs. “Currently the BLS is scheduled to release the September employment report on Friday October 4th. However, if there is a partial shut down of the government by Congressional Republicans, the employment report will be delayed. Back in 1996, following the partial government shutdown from December 16, 1995 through January 6, 1996, the BLS finally released the December 1995 employment report on January 19, 1996. A similar delay would happen this time if the government is shutdown on October 1st (the fiscal year begins on October 1st).” Read More »

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